Bridging the gap between retail banks and SME’s

As part of the ongoing series of “ecosystem outreach events” targetting different parts of the entrepreneurial ecosystem in Malawi, one such event dubbed “Bridging the gap between retail banks and start-ups/SME’s” took place last week. This follows the “Facing failure in Entrepreneurship” event that took place last month. Read highlights of that event here.

With SMEs and startups being the focus audience for this event, Ecobank Malawi anchored the round-table discussions focusing on how credit is generally assessed by banks. This gave the SMEs and start-ups an idea of where they could be falling short in accessing credit. Our Project Catalyst in Malawi, Postar Chikaoneka, who represented GrowthAfrica at the event shared some key highlights from the event below:

Record-keeping Quality financial records (e.g. Management Accounts) are usually the first assessment point but many SMEs or start-ups do not undertake formal record keeping. There was a plea for this to change and record keeping to become more professional as it is a worthwhile investment into ones business

Management Capacity Participants were encouraged to invest in the required expertise for the business to be taken more seriously in consideration for funding

Industry benchmarks Ecobank Malawi advised that they maintain data on industry benchmarks when looking at credit applications and thus encourage the SMEs and start-ups to take an active interest in their sectors in order to understand where they are positioned based on the data that they provide financial institutions with

Positive social impact SMEs or start-ups must make a significant business case for how they will contribute to broader society with their business in the proposals that they submit.

In trying to close some of the gaps that separate banks and SME’s or start-ups, Ecobank Malawi has partnered with organisations – e.g. Global Communities – to assist this set of businesses in preparing and presenting data that will increase their likelihood of accessing formal finance. This takes the form of training sessions organised in strategic communities. This has come from the realisation that SME’s and start-ups have a unique set of needs and challenges.

Finally, for Ecobank Malawi, initiatives such as Growth Accelerator Malawi provide them with the reassurance that start-up’s – especially – are becoming a more viable sub-sector to provide financing to as such programmes provide structured capacity building and technical assistance which contributes towards de-risking the earlier stage ventures.

Original article developed by Postar Chikaoneka – Project Catalyst Malawi